Will Limited Needs Kill Capitalism

This paper argues that a number of unorthodox analyses of capitalism can be understood from the point of view of orthodox economic theory. Our argument is based on the assumptions of monopolistic competition and that utility derived from consuming an individual good is bounded. model's predictions are consistent with some popular heterodox views, such as In modern capitalist society, productivity is so high that many people are nearly saturated with goods; Productivity growth reduces the real consumption wage of workers; and The benefits from growth are appropriated by symbol manipulators. Furthermore, depending on relative levels of product diversity and physical productivity, globalization may harm poorer workers in LDCs, rather than unskilled workers in developed countries, as is usually predicted.Comments on this paper can be found at: http://ssrn.com/abstract=2205773

Business · Capitalism · Political science · Economic Growth and Productivity · Economic Theory and Policy · Fiscal Policy and Economic Growth · Law